Why You Should Sell Your Goldcorp Inc. and Barrick Gold Corp. Shares and Buy Agnico Eagle Mines Ltd.

Agnico Eagle Mines Ltd. (TSX:AEM)(NYSE:AEM) faces practically no geopolitical risk, something that Barrick Gold Corp. (TSX:ABX)(NYSE:ABX), Goldcorp Inc. (TSX:G)(NYSE:GG), and Eldorado Gold Corp. (TSX:ELD)(NYSE:EGO) surely envy.

When you think of large Canadian gold miners worth owning, Agnico Eagle Mines Ltd. (TSX:AEM)(NYSE:AEM) may not be the first to spring to mind. But there’s one big reason why Agnico deserves a lot more attention.

Quite simply, Agnico faces far lower geopolitical risk than its larger peers. And in the world of mining, such an advantage cannot be ignored. After all, natural-resource based companies are stuck wherever their assets are; they cannot simply move to a different country when governments mistreat them.

Below we take a closer look.

Agnico: Not a bad place to be

Let’s take a look at where Agnico mines gold from. About 70% of production comes from Canada, and nearly 10% comes from Finland. The two countries rank sixth and tenth respectively on the Forbes Best Countries for Business list.

The remaining 20% of production comes from Mexico, a country that has been performing very well in recent years. Mexico has also become much more accommodating to business under reform-minded President Enrique Peña Nieto.

And unlike many of Agnico’s larger peers, the company operates in no other countries. This helps in a couple of ways. Not only is there less chance of a geopolitical surprise, but the company is able to concentrate on the areas it knows best. When looking at other Canadian miners, it becomes clear just how significant Agnico’s advantage is.

Eldorado and Barrick: Blindsided

Eldorado Gold Corp. (TSX:ELD)(NYSE:EGO) has been a strong performer for years. It has managed to grow very nicely, all while maintaining a pristine balance sheet. Unfortunately for the company’s investors, Eldorado faces a lot more geopolitical risk than Agnico.

And that came to light in late January, when the left-wing Syriza party won national elections in Greece, where Eldorado is developing a massive gold project. Syriza is dead-set opposed to Eldorado’s mining ambitions in the country, which is not good news for the miner, since Greece accounts for 30% of its reserves.

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) is facing problems of its own, down in Zambia. There the government raised royalty rates on open-pit mines from 6% to 20% as part of its 2015 budget. In response, Barrick is threatening to shut down its Lumwana copper mine in the country. Thankfully, Lumwana is not as important to Barrick as Greece is to Eldorado. But shareholders are still unhappy.

Goldcorp: Even the best have issues

Goldcorp Inc. (TSX:G)(NYSE:GG) has its own geopolitical issues to deal with. The most significant is in Argentina, where foreign exchange restrictions and high inflation are threatening the Cerro Negro mine, which just started production in July.

Because of these issues, Goldcorp could record an impairment charge of up to US$2.7 billion, a very big number even for a company of Goldcorp’s size.

And when you’re trying to make a bet on gold, are these really the kinds of issues you want to be dealing with? If not, Agnico might be just what you’re looking for.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

More on Metals and Mining Stocks

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

Cameco Stock and More: 3 TSX Commodity Titans to Watch in 2024

Cameco stock and these others will provide you with growth that goes beyond just a year or two, with all…

Read more »

Handwriting text writing Are You Ready For Tomorrow question. Concept meaning Preparation to the future Motivation Stand blackboard with white words behind blurry blue paper lobs woody floor.
Stocks for Beginners

3 Reasons to Buy Lundin Stock Like There’s No Tomorrow

Lundin stock (TSX:LUN) has been killing its production of copper and plans on blowing its records out of the water…

Read more »

Gold bars
Stocks for Beginners

TSX Materials in March 2024: The Best Stock to Buy Right Now

Materials have been quite volatile, though the price of gold has surged to all-time highs. That makes this stock a…

Read more »

Gold bars
Metals and Mining Stocks

Will Gold Stocks Rally in 2024?

Down almost 30% from all-time highs, Franco-Nevada is a gold mining stock trading at a discount to consensus price target…

Read more »

A miner down a mine shaft
Stocks for Beginners

Canadian Mining Stocks: Buy, Sell or Hold?

Canadian mining stocks have seemed like such a strong investment, but with shares down significantly this year, what should we…

Read more »

Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)
Stocks for Beginners

Great News for Gold Stock Investors!

Gold has hit an all-time high! Which is good news for some gold stocks, and really good news for others.

Read more »

Gold bullion on a chart
Metals and Mining Stocks

If Gold Prices Continue to Climb, These 3 Stocks Could Skyrocket

Market certainty and geopolitical tensions typically enhance the demand for gold, and this rise is reflected in a wide range…

Read more »